Payment and Settlement Systems (Finality and Netting) Bill

In this Act, unless the context otherwise requires —

“Authority” means the Monetary Authority of Singapore established under the Monetary Authority of Singapore Act (Cap. 186);

“book-entry Government securities” means any securities issued by the Government under any written law transferable by a book-entry on a register or otherwise;

“default arrangements” means the arrangements put in place by a designated system to limit systemic and other types of risk which arise in the event of a participant appearing to be unable, or likely to become unable, to meet its obligations in respect of a transfer order, including any arrangements for —

“defaulter” means a person in respect of whom action has been taken by a designated system under its default arrangements;

“designated system” means a system that is designated by the Authority under section 3 to be a designated system for the purposes of this Act;

“disposition of property” includes a payment made into or out of an account of a participant;

“netting” means the conversion into one net claim or one net obligation of claims and obligations resulting from transfer orders which a participant either issues to, or receives from, one or more other participants with the result that only a net claim can be demanded or a net obligation be owed;

“operator”, in relation to a designated system, means the person specified in the order referred to in section 3(1) as the operator of the designated system;

“participant” means a party to an arrangement that establishes a system;

“relevant office holder” means —

“settlement institution”, in relation to a designated system, means a body corporate providing accounts for the participants of the designated system to hold funds and to settle transactions between participants in the designated system;

“system” means a system established for —

“transfer order” means —

A reference in this Act to the law of insolvency shall be construed as a reference to —

The Authority may, by order published in the Gazette, designate a system to be a designated system for the purposes of this Act, subject to such terms and conditions as may be prescribed in the order.

Any order made under subsection (1) shall specify the operator of the designated system.

The Authority may, by order published in the Gazette, revoke the designation of a designated system if —

Subject to subsection (3), the Authority shall not revoke a designation without giving the operator of the designated system an opportunity to be heard.

The Authority may revoke a designation on any of the grounds described in subsection (1)(a)(iii), (iv) or (v) without giving the operator of the designated system an opportunity to be heard.

A revocation of a designation shall not operate so as to avoid or affect any transaction cleared or settled in the designated system prior to the revocation or preclude the application, in accordance with section 5, of this Act to any such transaction.

The general law of insolvency shall have effect in relation to —

This Part shall apply in relation to bankruptcy, judicial management and winding up proceedings only in respect of a participant.

Notwithstanding that rights or liabilities arising from transfer orders are or may be dealt with in bankruptcy, judicial management or winding up proceedings, this Part shall not apply to such proceedings if they are in respect of any person who is not a participant.

This section shall apply where the rules of a designated system provide that —

Notwithstanding anything to the contrary in any written law or rule of law, any transfer or settlement referred to in subsection (1) shall not be reversed, repaid or set aside and no order shall be made by any court for the rectification or stay of such transfer or settlement.

None of the following shall be regarded as to any extent invalid on the ground of inconsistency with the law for distribution of the assets of a person on bankruptcy or winding up, or on the appointment of a receiver, receiver and manager or an equivalent officer over any of the assets of a person:

The powers of a relevant office holder and the powers of a court under the law of insolvency, shall not be exercised in such a way as to prevent or interfere with —

A debt or other liability arising out of a transfer order which is the subject of action taken under default arrangements may not be proved in a bankruptcy or winding up until the completion of the action taken under default arrangements.

A debt or other liability which by virtue of subsection (3) may not be proved shall not be taken into account for the purposes of any set-off until the completion of the action taken under default arrangements.

This section shall apply with respect to any net sum owed by or to a defaulter on the completion of the action taken under default arrangements.

Notwithstanding section 87 or 88 of the Bankruptcy Act (Cap. 20) and section 327 of the Companies Act (Cap. 50), where a court has made an order for bankruptcy or winding up of a participant or a resolution for the voluntary winding up of a participant has been passed, the net sum referred to in subsection (1) shall be —

Except to the extent that it expressly provides, this Act shall not operate to limit, restrict or otherwise affect —

Nothing in subsection (1) shall be construed to require —

A participant shall notify the operator of a designated system as soon as practicable after the occurrence of any of the following events:

Any participant who contravenes subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $20,000.

A participant does not contravene subsection (1) if —

The Authority may make such regulations as may be necessary or expedient for carrying out the purposes and provisions of this Act and for prescribing anything that may be required or authorised to be prescribed by this Act.

Without prejudice to the generality of subsection (1), the Authority may make regulations for the following purposes:

Section 59A of the Banking Act is repealed.

The Monetary Authority of Singapore Act (Cap. 186) is amended by inserting, immediately after section 29, the following section:“Real-time gross settlement system29A.—

“book-entry securities and instruments” means any securities and instruments that are transferable by a book-entry on a register or otherwise, and are —

“certificate” has the same meaning as in the Electronic Transactions Act (Cap. 88);

“certification authority” has the same meaning as in the Electronic Transactions Act (Cap. 88);

“participant” means a person approved by the Authority to be a participant of a settlement system and shall include the Authority where it participates in the settlement system;

“real-time gross settlement system” means a system which can effect final settlement of funds, payment obligations and book-entry securities and instruments on a continuous basis during such operating hours of a processing day as the Authority may determine and on a transaction-by-transaction basis;

“settlement system” means any real-time gross settlement system established under subsection (1).”.

Section 69(4) of the Securities and Futures Act 2001 (Act 42 of 2001) is amended by deleting the words “sections 59A, 61 and 62 of that Act” and substituting the words “sections 61 and 62 of that Act and the Payment and Settlement Systems (Finality and Netting) Act 2002”.